Disney took advantage of a special tax district to effectively govern itself by hand-picking board members who received exclusive benefits and perks from the company, a new financial audit shows.
Disney showered board members and employees of the Reedy Creek Improvement District (RCID) with perks and benefits over the district’s lifespan, according to a financial audit carried out by the new governing body installed by Republican Florida Gov. Ron DeSantis in spring 2023. (RELATED: Disney Quietly Acknowledges Its Left-Wing Agenda Is Costing Shareholders)
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“What is now evident is that Disney not just controlled the Reedy Creek Improvement District, but did so by effectively purchasing loyalty,” read a new report on the RCID’s past practices created by the Central Florida Tourism Oversight District (CFTOD), the entity created by Florida to replace the RCID and oversee Disney World.
“As comprehensively documented within, for years, the company treated district employees like Disney employees by, for instance, providing complimentary annual passes and steep discounts—benefits and perks that were akin to bribes. Not surprisingly then, the District’s employees believed that it was their job to prioritize the interests of Disney,” the report added.
Florida created the RCID in the 1960s to facilitate Disney’s expansion into Florida, and the district’ unique structure allowed Disney to possess complete control over itself, the report detailed.
RCID board members were elected by district landowners whose votes were allocated based on acres owned. Disney owned the vast majority of the land, meaning board members could not be elected without the company’s support, the audit stated.
ORLANDO, FL – MARCH 22: A view of the entrance of Walt Disney World on March 22, 2022 in Orlando, Florida. Employees are staging a company-wide walkout today to protest Walt Disney Co.’s response to controversial legislation passed in Florida known as the “Don’t Say Gay” bill. (Photo by Octavio Jones/Getty Images)
Board members were required to own land in the RCID, and Disney temporarily provided them with five acres of land during their tenure on the board, the report stated. The company reportedly paid board members’ property tax liability for owning land in the district, one of the many perks Disney gave to board members and employees.
“Disney cultivated this perspective by making complimentary annual passes and steep Disney discounts available to RCID employees, retirees, members of the Board of Supervisors, and other VIP vendors on the same terms as Disney employees, known as cast members. Initially, Disney provided these benefits free of charge; later, the RCID began reimbursing Disney for these expenses, which amounted to millions of dollars annually in recent years,” the report laid out.
“The RCID even seems to have misleadingly concealed the purpose of these multi-million-dollar annual payments on its annual financial reports, labeling them ‘financial and administrative services,’ when in fact, they were Disney perks given to employees. When Disney paid for these benefits, they were improper—akin to bribes of public officials and employees,” the audit continues.
Some of the perks given to “cast members” included theme park passes for the recipient and up to three family members, cruise discounts, free holiday season tickets, Disney merchandise discounts, food and beverage discounts and access to discounted merchandise that was not publicly available, the report stated.
LAKE BUENA VISTA, FL – JULY 09: A view of the Walt Disney World theme park entrance on July 9, 2020 in Lake Buena Vista, Florida. The theme park is scheduled to reopen on Saturday despite a surge in new Covid-19 infections throughout Florida, including the central part of the state where Orlando is located. (Photo by Octavio Jones/Getty Images)
Between fiscal years 2018-2023, these benefits cost the RCID between $1.78 million and $2.54 million annually, or between $3,672 and $4,898 per employee, the report showed. These benefits were not considered by the RCID to be taxable employee benefits, despite the perks having little to do with the employees’ jobs.
The RCID was not responsible for hosting any public services such as schools and hospitals, instead reportedly foisting those costs onto other locations where district employees were housed. At the same time, the RCID deferred road maintenance and had no mechanism for enforcing fire code, according to the audit.
However, the RCID did spend thousands of dollars per year on gifts and celebrations for employees, the auditors found.
“The RCID spent thousands of dollars annually on years-of-service gifts and celebrations—including by paying for RCID employees to attend private celebrations hosted by Disney at its theme parks and otherwise reserved for Disney cast members. The former District Administrator charged hundreds of thousands of dollars on his District American Express card for celebrations, sports tickets, memberships, meetings, and other events,” the report said.
Disney reportedly used its power over the district to outsource expenses to non-Disney taxpayers and ensure non-Disney taxpayers used Disney-approved vendors for specific projects.
For example, the RCID financed the construction of three garages outside of Disney Spring costing a total of roughly $700 million, of which almost $100 million was paid by other taxpayers, the report found.
None of the RCID board meetings were transcribed or recorded, and none of the meeting agendas were put on its website, according to the audit.
Florida Governor Ron DeSantis answers questions from the media in the Florida Cabinet following his “State of the State” address during a joint session of the Florida Senate and House of Representatives at the Florida State Capitol in Tallahassee, Florida, on March 7, 2023. – DeSantis positioned himself Tuesday as the leading Republican alternative to White House candidate Donald Trump, launching a legislative session that offers red meat for the ex-president’s base as the party’s rising star weighs his own 2024 campaign. (Photo by CHENEY ORR / AFP) (Photo by CHENEY ORR/AFP via Getty Images)
Florida mandated the CFTOD conduct a thorough audit on the RCID as part of the overhaul put forth by Gov. DeSantis. The CFTOD general counsel and outside counsel created a portion of the report and relied on experts to generate additional elements of the audit.
Four expert reports were conducted by law professor Donald Kochan, forensic accountant William Jennings, engineering and planning consulting firm Kimley-Horn and management consulting firm Raftelis.
The independent expert reports are included as part of the full financial audit. Kochan is a Professor of Law at George Mason University, and his report focuses on how Disney obtained the special district arrangement through deceptive practices and took full advantage of it.
Jennings produced a financial report with details of the benefits Disney gave to RCID board members and employees. The expert accountant discovered flaws in contracting, sourcing, administration and payments.
For example, the RCID contracted to provide Disney with $7.7 million for costs supposedly incurred by road construction affecting a Disney golf course, according to the report. Jennings found there was no evidence to support this payment as compared to alternative solutions.
Kimley-Horn created an urban planning report based on the RCID’s land use practices and operative comprehensive plan designed to promote corporate goals, rather than strong governance. Raftelis was brought in for its utility rate expertise to compare the rates offered to the RCID by a Disney subsidiary.
Gov. DeSantis signed legislation in February replacing the RCID with the CFTOD after Disney came out against DeSantis’ bill signed in March 2022 preventing schools from teaching about sexuality and gender identity in K-3 classrooms.
Right before DeSantis overhauled Disney’s governance arrangement, the RCID and Disney attempted to sign legal agreements to lock in its special benefits, the audit explained. Disney and the CFTOD are fighting an ongoing legal battle related to the validity of the last minute legal agreements.
The DeSantis administration and Disney are also embroiled in a legal battle related to the Republican governor’s public feud with the company. Disney’s lawsuit against DeSantis is focusing on its free speech challenge.
DeSantis is currently running for president in the Republican primary, where he trails former President Donald Trump across national polling, according to the RealClearPolitics polling average.
Disney did not respond to a request for comment by the time of publication.